The truth of the tape may be on the verge of being tested: If every asset class has benefited from the kiting of the world's reserve currency, then what happens should the dollar rally?

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Ten somersets he'll undertake on solid ground 'aving been some days in preparation A splendid time is guaranteed for all And tonight Mr. Kite is topping the bill - Being for the Benefit of Mr. Kite (The Beatles)

A smart man once said to me - "Any fool can believe the truth, it takes a genius to believe a palpable lie."

It has paid handsomely to believe in the market strength in the face of $700 plus gold, $80 plus oil and a tobogganing dollar. In fact, it has paid to thumb your nose at the above trifecta and chase stocks as they prance through a hog's head of real fire.

How long can Hoofy dance this waltz over men and horses hoops and garters?

How long can he perform this feat of denial and challenge the world?

The truth of the tape may be on the verge of being tested: If every asset class has benefited from the kiting of the world's reserve currency, then what happens should the dollar rally? As Todd says, "Be careful what you wish for." What's good for the goose may not be good for the gander.

Of course, the bulls debate that the fundamentals continue to argue in favor of a weak dollar. Perhaps so, but these are the same folks that justify chasing stocks in vertical assents by debunking fundamentals and deifying momentum for its own sake. Seems to me there are a lot of long side strategists who are trying to have their cake and eat it too. Or as Marie Antoinette supposedly said before a date with destiny – "Let them eat cake." Or was it "Just a little bit off the top please?"

Pray tell, why would the dollar stage a rally? Perhaps more buyers then sellers? Perhaps the dark side on the dollar has become too crowded of late.

Similarly, perhaps the long side on the Baidu.com (BIDU), Research in Motion (RIMM), Apple (AAPL), Google (GOOG) trade has also become too crowded and oh so pat.

Be that as it may, the popular indices were down all day Monday, coincidence with a sell-off in oil and gold and a rally in the dollar. Is there a whiff of deflation in the autumn air coincident with the long anticipated top in the Chinese market?

The market is perfectly logical. It's just that its logic is perverse. In this way Mr. Kite, Mr. Market, challenges the world.

Mr. G, the legendary W.D. Gann, believed in the power of market anniversary dates. Monday was the anniversary of the LTCM low. This week in 1929 and 1987 the market stared into the abyss. Many times anniversary dates alternate from high to low, assuming any significance at all. So, it is interesting that one of the leadership sectors on the way down this year, the IYR may be at a significant inflection point. Why?

The IYR turned-up the important quarterly Wheel of Time on Friday: i.e., its Quarterly Swing Chart turned up on trade above the second quarter high.

At the same time the IYR has approached the underbelly of its overhead 200 DMA. In a bull market if you turn the chart upside down, you would look to be a buyer.

Interestingly, after large range upward extensions on Friday, some names in the group such as Avalonbay (AVB) and Simon Property Group (SPG) left Fantasy Island Sell Signals on Monday. This occurs when a stock makes a new sixty-day high and laps down closing near the low of the session. Likewise, Bear Stearns (BSC), one of the culprits for this summer's melee, also left a Fantasy Island Sell Signal on Monday after rallying up to approximately 50% of its year's range on Friday.

At the same time the RIMM, BIDU, GOOG, AAPL kites have hit the stratosphere. All hail Icarus. The Street may be long wax and wings if 1540 S&P breaks and sticks.

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